This chapter first briefly traces the history of European monetary integration. It then examines: the politics and economics of the Maastricht Treaty and Economic and Monetary Union/European Monetary ...
More

This chapter first briefly traces the history of European monetary integration. It then examines: the politics and economics of the Maastricht Treaty and Economic and Monetary Union/European Monetary Union (EMU); the convergence criteria and the transition to the final stage; and the institutional structure provided for in the treaty. It concludes with the main outstanding issues, drawing on the experience of the first two years of life with the euro, and the prospects for the future.Less

Monetary Policy and the Euro

Loukas Tsoukalis

Published in print: 2003-03-20

This chapter first briefly traces the history of European monetary integration. It then examines: the politics and economics of the Maastricht Treaty and Economic and Monetary Union/European Monetary Union (EMU); the convergence criteria and the transition to the final stage; and the institutional structure provided for in the treaty. It concludes with the main outstanding issues, drawing on the experience of the first two years of life with the euro, and the prospects for the future.

This chapter analyzes the process of European monetary integration, focusing on the decades that led up to the creation of the common currency. This is because this period is one in which, as in the ...
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This chapter analyzes the process of European monetary integration, focusing on the decades that led up to the creation of the common currency. This is because this period is one in which, as in the gold standard era, national governments had to decide on their currency policy, and, again as in the gold standard period, there were major domestic political conflicts over this choice. The battles over exchange rate policy in Europe since the early 1970s were at the center of the broader process of European integration. The eventual adoption of the euro was perhaps the crowning achievement of prointegration forces, and both the process and result reflect the central realities of contemporary Europe's political economy.Less

European Monetary Integration: From Bretton Woods to the Euro and Beyond

Jeffry A. Frieden

Published in print: 2016-09-06

This chapter analyzes the process of European monetary integration, focusing on the decades that led up to the creation of the common currency. This is because this period is one in which, as in the gold standard era, national governments had to decide on their currency policy, and, again as in the gold standard period, there were major domestic political conflicts over this choice. The battles over exchange rate policy in Europe since the early 1970s were at the center of the broader process of European integration. The eventual adoption of the euro was perhaps the crowning achievement of prointegration forces, and both the process and result reflect the central realities of contemporary Europe's political economy.

Alexandre Lamfalussy is especially well known as the first president of the European Monetary Institute, where he laid the foundations for the ECB. Earlier, as economic adviser at the BIS and in the ...
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Alexandre Lamfalussy is especially well known as the first president of the European Monetary Institute, where he laid the foundations for the ECB. Earlier, as economic adviser at the BIS and in the Delors Committee, he played an important role in introducing academic insights into the central banker’s discussions. Typical for Lamfalussy was a profound distrust of the functioning of financial markets, very much marked by the Latin American debt crisis. Lamfalussy’s advocacy of EMU had its origin in two main sources: a profound European conviction and a fundamental distrust of flexible exchange rates. Moreover, Lamfalussy was strongly in favour of a symmetric EMU, with a strong economic pillar. Also, in his view, the central bank should not only safeguard price stability, but should consider financial stability as an objective. This chapter is based on a variety of sources, including large-scale interviews and archival research.Less

Alexandre Lamfalussy : A Cassandra about Financial Stability

Ivo Maes

Published in print: 2016-08-18

Alexandre Lamfalussy is especially well known as the first president of the European Monetary Institute, where he laid the foundations for the ECB. Earlier, as economic adviser at the BIS and in the Delors Committee, he played an important role in introducing academic insights into the central banker’s discussions. Typical for Lamfalussy was a profound distrust of the functioning of financial markets, very much marked by the Latin American debt crisis. Lamfalussy’s advocacy of EMU had its origin in two main sources: a profound European conviction and a fundamental distrust of flexible exchange rates. Moreover, Lamfalussy was strongly in favour of a symmetric EMU, with a strong economic pillar. Also, in his view, the central bank should not only safeguard price stability, but should consider financial stability as an objective. This chapter is based on a variety of sources, including large-scale interviews and archival research.

This chapter puts the Eurogroup's work into the historical and institutional context of the EMU. It explains how the creation of the Eurogroup responded to particular institutional deficiencies ...
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This chapter puts the Eurogroup's work into the historical and institutional context of the EMU. It explains how the creation of the Eurogroup responded to particular institutional deficiencies inherent to the EMU's economic governance set-up. Moreover, it also considers the effects of the multi-speed nature of European monetary integration on the efforts to strengthen economic policy coordination in Stage 3.Less

Why does EMU require informal governance?

Uwe Puetter

Published in print: 2006-06-02

This chapter puts the Eurogroup's work into the historical and institutional context of the EMU. It explains how the creation of the Eurogroup responded to particular institutional deficiencies inherent to the EMU's economic governance set-up. Moreover, it also considers the effects of the multi-speed nature of European monetary integration on the efforts to strengthen economic policy coordination in Stage 3.

The exchange rate is the most important price in any economy, since it affects all other prices. Exchange rates are set, either directly or indirectly, by government policy. Exchange rates are also ...
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The exchange rate is the most important price in any economy, since it affects all other prices. Exchange rates are set, either directly or indirectly, by government policy. Exchange rates are also central to the global economy, for they profoundly influence all international economic activity. Despite the critical role of exchange rate policy, there are few definitive explanations of why governments choose the currency policies they do. Filled with in-depth cases and examples, this book presents a comprehensive analysis of the politics surrounding exchange rates. Identifying the motivations for currency policy preferences on the part of industries seeking to influence politicians, the book shows how each industry's characteristics—including its exposure to currency risk and the price effects of exchange rate movements—determine those preferences. The book evaluates the accuracy of this theoretical argument in a variety of historical and geographical settings: it looks at the politics of the gold standard, particularly in the United States, and examines the political economy of European monetary integration. It also analyzes the politics of Latin American currency policy over the past forty years, and focuses on the daunting currency crises that have frequently debilitated Latin American nations, including Mexico, Argentina, and Brazil. With a mix of narrative and statistical investigation, the book clarifies the political and economic determinants of exchange rate policies.Less

Currency Politics : The Political Economy of Exchange Rate Policy

Jeffry A. Frieden

Published in print: 2016-09-06

The exchange rate is the most important price in any economy, since it affects all other prices. Exchange rates are set, either directly or indirectly, by government policy. Exchange rates are also central to the global economy, for they profoundly influence all international economic activity. Despite the critical role of exchange rate policy, there are few definitive explanations of why governments choose the currency policies they do. Filled with in-depth cases and examples, this book presents a comprehensive analysis of the politics surrounding exchange rates. Identifying the motivations for currency policy preferences on the part of industries seeking to influence politicians, the book shows how each industry's characteristics—including its exposure to currency risk and the price effects of exchange rate movements—determine those preferences. The book evaluates the accuracy of this theoretical argument in a variety of historical and geographical settings: it looks at the politics of the gold standard, particularly in the United States, and examines the political economy of European monetary integration. It also analyzes the politics of Latin American currency policy over the past forty years, and focuses on the daunting currency crises that have frequently debilitated Latin American nations, including Mexico, Argentina, and Brazil. With a mix of narrative and statistical investigation, the book clarifies the political and economic determinants of exchange rate policies.